3a) What distinguishes a developing country from a developed country (10mks)
ADVICE: All the indicators are examined here with supporting statistics. There won’t be time to include statistics for all the indicators, so you’ll include those that you most easily remember).
Countries can be classified as developed or developing according to the value of the gross national product (GNP) per capita. A developing country can be distinguished from a developed country by examining indicators such as the size of GDP per capita, economic structure, population growth, population structure, distribution of income, employment, trading position, urbanization, technology and provision of infrastructure.
Low income and middle income economies are known as developing countries. Low income is $755 or less and middle income $756 to $9265. High income economies have an income of $9266 and above. These are classified as developed countries. Zimbabwe is a developing economy because according to the Central Intelligence Agency (CIA) its GDP per capita is $500 whereas that of a developed economy such as the US is $48 100.
Their economic structures also differ. Developing countries have a high dependence on the primary sector whereas developed countries have a high dependence on the tertiary sector. The primary sector includes agriculture and the extractive industries. The secondary sector includes manufacturing and construction and the tertiary sector is the service sector. On average agriculture contributes about 30-60% of output in low income developing countries compared to less than 5% in developed countries. This high dependency on agricultural output makes developing countries vulnerable to the forces of nature which can destroy their agricultural exports and wipe out their foreign exchange earnings. In Zimbabwe agriculture accounts for 20.4% of GDP whereas in the USA, it accounts for only 1.2% of GDP.
The population growth rate in developing countries is much higher than that of developed countries. The birth rate in Zimbabwe is 32 births per 1000 of the population, whereas in USA it is 14 births per 1000 of the population. The population structure also differs. Developing countries have a high number of young people while developed countries have an ageing population. This is shown in the Table 1 below.
Table 1: Population structure of USA and Zimbabwe
|Age range |Zimbabwe |USA | |0-14 |42% |20% | |15-64 |54% |67% | |65 and over |4% |13% |
The dependency ratio in developing countries is high. This means that a proportionally small working population has to produce enough goods and services to sustain not only themselves but also the large number of young people who are economically dependent on them. In the European Union it is estimated that by 2050 two-thirds of the population will be over 65 and therefore considered not economically active.
The distribution of income is uneven in both countries however the population living below the poverty line is greater in the developing countries. In Zimbabwe for instance 68% of the population live below the poverty line compared to 15.1 % for the USA.
Developing countries also have higher levels of unemployment and underemployment than developed countries. Unemployment tends to be high because in countries with surplus populations the supply of labour tends to exceed the supply of other factors of production. The majority of the population is employed in agriculture in the developing countries, but in the developed...